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Peter Davis

An writer at FOMOdrive

  • Sep 05, 2023
  • 2 min read

FTX asset sell-off could bring down the crypto market?

The rate of money leaving crypto funds is decreasing.

In the span of two weeks, crypto whales poured more than $1.5 billion into bitcoin.

The success of Grayscale has increased the likelihood of Bitcoin ETF being approved.

Concerns were raised in the altcoin dump after an FTX-linked wallet transferred assets worth ~$10.2 million.

CoinShares reported that investments in crypto funds dropped by $11 million last week, making it the third consecutive week and six out of the last seven weeks that have seen an outflow of funds. Investments in Bitcoin rose by $4 million, while Ethereum saw a decrease of $3 million. Funds that allow for shorting Bitcoin also experienced a decrease of $3 million. Polygon saw the most significant outflow of funds, with $8.6 million.

Despite the decrease in capital withdrawals, trading activity was 90% higher than the year-to-date average of $2.8 billion for the week. At the beginning of the week, investors were optimistic that the U.S. Securities and Exchange Commission (SEC) would approve the spot ETF, resulting in a surge of Bitcoin inflows. However, the SEC's announcement that it would postpone its decision on ETF applications until October dashed these hopes, according to CoinShares.

In the last fortnight, crypto whales have injected more than $1.5 billion into Bitcoin, as reported by IntoTheBlock. This influx of capital came after BTC experienced a sharp decline in mid-August.

JP Morgan is certain that the SEC had no other option but to approve applications for the launch of spot bitcoin ETFs after the court ruling in the Grayscale case. However, the regulator needs to take the necessary steps to prepare for this, which is why the decision was postponed until October. It is possible that the SEC will approve multiple applications at once.

Bernstein believes that once the SEC approves a Bitcoin ETF, registration of a similar product based on Ethereum will soon follow. Additionally, products based on Solana, Polygon, and DeFi tokens may be potential candidates for further growth of the crypto-ETF market.

Cathy Wood, CEO of ARK Invest, believes that the combination of Bitcoin and artificial intelligence has the potential to revolutionize how businesses are structured, resulting in significant cost savings and a surge in productivity.

Concerns have been raised about potential cryptocurrency selloffs due to wallet activity linked to the bankrupt FTX exchange. On August 24, FTX declared its intention to "sell, stake and hedge" $3 billion worth of its digital assets.

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